AAPL / Iphone5 / 12 Sep

[Marco]

Is anyone playing next weeks announcement (presumably new Iphone)? Either directional or from a Vol angle?

Not sure about direction - I didn't look up previous announcements, but from memory the market hypes it up into the announcement and then more often than not fades the move afterwards (well for a while at least). However not sure how much hype is priced in now after the decent Aug rally in the stock. So maybe more of an IV play?

Has anyone experience with IV trades ahead of AAPL announcements (other than earnings - WWDC, products etc.)

[smt1]

For reference (source, random sites on Google):

[tjlocke99]

marco,

We discussed this idea in this thread.

http://steadyoptions.com/forum/topic/452-aapl-september-2012-announcement-play/page__hl__aapl#entry8344

Tough call. The stock has shot up over $100 since its low. I have no idea on the volatility play side of it.

[tjlocke99]

For reference (source, random sites on Google):

Interesting. If this is accurate then don't hold AAPL long positions after the events. Perhaps entering the month, week, or even day prior to an event could be a good bullish play, but I have no idea how IV did during these times.

[Guest listolyman]

Kim/Chris, Do you ever paper trade these events to gather IV data for possible future events?

Edited September 5, 2012 by listolyman

[Marco]

marco,

We discussed this idea in this thread.

http://steadyoptions..._aapl#entry8344

Tough call. The stock has shot up over $100 since its low. I have no idea on the volatility play side of it.

ah looks I'm late to the party then! Missed that thread - thanks!

[Rogers]

maybe some type of bullish calendar up into the announcement to take advantage of the IV increase and then an IC type trade after the announcement to take advantage of the IV drop?

[Kim]

I think bullish calendar around 3-4% OTM might be not a bad idea. For example: Buy Oct. 700 call, sell Sep. 700 call around 9.70. The downside is limited before the announcement, the IV of Sep. options should rise, and if the stock rises, the trade will make more money.

[tjlocke99]

I think bullish calendar around 3-4% OTM might be not a bad idea. For example: Buy Oct. 700 call, sell Sep. 700 call around 9.70. The downside is limited before the announcement, the IV of Sep. options should rise, and if the stock rises, the trade will make more money.

Kim,

My concern would be the Sept options expire after the 12th, so as you as you say the IV could rise faster on the Sept short than the Oct long.

[Rogers]

Kim was probably proposing the SEP monthly and the OCT monthly

[Guest DShaver]

Mid on that SEP/OCT 700 calender says its about 9.45 you think that'll be a good entry price. Also when would we be looking to enter this trade?

[Kim]

Mid on that SEP/OCT 700 calender says its about 9.45 you think that'll be a good entry price. Also when would we be looking to enter this trade?

I see mid of 9.80. I would prefer to get it under $9.00, this is where it was couple of days ago, but not sure it will go there again.

[Guest listolyman]

It's down to 9.15 now. Getting close to the target.

[Guest DShaver]

i got filled at 8.95, and showing that its closed around 8.65

[Thaze]

Price has backed off, anyone else thinking about taking this?

[Marco]

I think bullish calendar around 3-4% OTM might be not a bad idea. For example: Buy Oct. 700 call, sell Sep. 700 call around 9.70. The downside is limited before the announcement, the IV of Sep. options should rise, and if the stock rises, the trade will make more money.

Why do you want to short the front month? Isn't that against the theory of rising IV into an event?

[cwerdna]

I think bullish calendar around 3-4% OTM might be not a bad idea. For example: Buy Oct. 700 call, sell Sep. 700 call around 9.70. The downside is limited before the announcement, the IV of Sep. options should rise, and if the stock rises, the trade will make more money.

Interesting... on Options Action on CNBC on Friday (Sept 7th), they were proposing this trade. He wanted the Sept short call to expire worthless. The only purpose was to reduce the price of the Oct 700 call.

From what I can tell on the show (which I watch every week and have been doing so for months), they don't really do trades based on rising IV or falling IV.

[Kim]

Interesting... on Options Action on CNBC on Friday (Sept 7th), they were proposing this trade. He wanted the Sept short call to expire worthless. The only purpose was to reduce the price of the Oct 700 call.

From what I can tell on the show (which I watch every week and have been doing so for months), they don't really do trades based on rising IV or falling IV.

Here is where Dan Nathan describes the trade - http://www.riskreversal.com/2012/09/07/new-trade-aapl-flat-term-structure-speaks-to-fading-the-iphone-event-sept-and-buying-the-rumored-ipad-mini-event-in-oct/. Maybe he is a member of SteadyOptions? That would explain some of the liquidity issues we have seen lately..

The problem is he is a bit late to the party - I recommended the trade below $9, and those who got it at this price, are already up ~15%.

[xpresstalk]

Interesting... on Options Action on CNBC on Friday (Sept 7th), they were proposing this trade. He wanted the Sept short call to expire worthless. The only purpose was to reduce the price of the Oct 700 call.

From what I can tell on the show (which I watch every week and have been doing so for months), they don't really do trades based on rising IV or falling IV.

Interestingly, I entered this trade this morning before I saw that y'all had started talking about it. We will see. I'm in only one contract.

[Thaze]

Due to the significant drop in todays price (but increasing IV), are we still looking to do this trade with smaller strikes? Say maybe a 685 or 690 strike, give or take a few points...

Edited September 10, 2012 by Thaze

[Kelly Park]

Any thoughts on buying the SEP 665 straddle and selling the 660 P 670 C. Currently at 4.70 midpoint. Small movement to have gain near expiration

[Xfanman]

Chris at Epsilon has proposed a back spread similar to the VXX play. Looks like I can get it for a credit at the moment on the 680 sell and 690 buy. Thoughts?

Edited September 11, 2012 by Xfanman

[Xfanman]

Well answering my own question after reviewing the actual release day price history it doesn't look like that promising of a strategy if it's going to take a large positive move to be profitable because the historical day of moves don't look that significant unless the intraday swings are much larger than the end of day numbers?

Edited September 11, 2012 by Xfanman

[Kim]

Based on previous announcements price action, it usually was "buy the rumor sell the new" event. I would probably close any bullish trades today. I have a feeling this launch is not going to be accepted very well by investors, after a huge run in the stock price.

[Thaze]

What about using a condor to capture any movement either way? If the stocks fails to jump alot, we can still cash out for a very minimal loss + commission.

Edited September 11, 2012 by Thaze

[Kim]

What about using a condor to capture any movement either way? If the stocks fails to jump alot, we can still cash out for a very minimal loss + commission.

I assume you mean Reverse Iron Condor (buying the mid selling the wings)?

This is similar to what we do with earnings trades - we buy them few days before the event and sell the day before. Holding through the event will have the same risk - if the stock has just a small move, the IV decrease will hurt the trade badly. It might be not as bad as with earnings plays, but you never know.

[Thaze]

Yes, that is what I meant, sorry about that. I'm thinking it might have some potential, so I'll look into it and see what I come up with. Thanks Kim.

Edit - Just looked at the IV values and they are pretty low as it is (on the monthly), currently sitting at around 30% on each option. I would assume they couldn't drop too much lower. Whats your thought on this Kim (or anyone else)?

Edited September 11, 2012 by Thaze

[cwelsh]

My IV charts show IV well up off the low of a few days ago (8/9) --- doing anything banking on an IV play would have been a good idea then.

As for how I traded this event (or am doing in the process) -- I sold an OTM RIC (615/620/690/695) for a .55 credit -- with 3 days left to expiration. Getting that price, at that far out, with only 3 days to expiration makes me nervous, because something APPEARS to be baked in that I don't know about. That said, all of my models are pinging like crazy, so went in. Have to keep a quick exit trigger finger though.

[xpresstalk]

Interestingly, I entered this trade this morning before I saw that y'all had started talking about it. We will see. I'm in only one contract.

OK, So I am up 30% in this trade. It is:

Sold 1 Sept 21 700 call at 6.10

Bought 1 Oct 700 Call for 16.60

My orginal plan was to let the Sept Strike expire. Looks like it will be ITM soon. So that plan is out the window! I am in uncharted territory here! So, a little advice from the SO community: If you were in this position, would you:

-Take your profits and run!

-Stay in either seeing if AAPL will have a pullback

-Roll the Sept 21 700 call next week

Thanks in advance for any reply!

Edited September 14, 2012 by xpresstalk

[Kim]

Your maximum gain is at $700. Anything higher or lower will reduce the gains. Right now the stock is very close to $700. If you think it has a good chance to stay near the strike, then wait. But AAPL is a volatile stock, I personally would probably take the 30% gain.

[Guest listolyman]

My IV charts show IV well up off the low of a few days ago (8/9) --- doing anything banking on an IV play would have been a good idea then.

As for how I traded this event (or am doing in the process) -- I sold an OTM RIC (615/620/690/695) for a .55 credit -- with 3 days left to expiration. Getting that price, at that far out, with only 3 days to expiration makes me nervous, because something APPEARS to be baked in that I don't know about. That said, all of my models are pinging like crazy, so went in. Have to keep a quick exit trigger finger though.

Did you have a significant loss? I lost about 35% this morning on the appl back ratio.

[xpresstalk]

Your maximum gain is at $700. Anything higher or lower will reduce the gains. Right now the stock is very close to $700. If you think it has a good chance to stay near the strike, then wait. But AAPL is a volatile stock, I personally would probably take the 30% gain.

Took the 30% and ran! This erases most of my August losses. Back in positive territory now!